Archive for February, 2012

A few months ago I talked about the different emails I use for chasing late payers.   Judging by the interest this post received, it seems that late payers are becoming more and more of a problem for freelancers and small business owners.

As regular readers will know, I am an advocate of using cloud based accounting software – and my choice for this type of service is FreeAgent.

As I received so much interest in the late payment email templates, and a few questions on how I set up automatic chasing of late payers, I thought I would today share how I set up Freeagent to do the escalation for me.

I am sure that many, if not all, of the other accounts systems out there have similar late payment escalation systems in place – so this will be just as relevant.

Setting up Late Payment Chase Escalation in FreeAgent
One of the things I love about freeagent is that in many aspects of the accounting process, you can set something up and forget about it.  This is equally true for chasing late payers as it is for setting up standing orders or salary payments.   In terms of setting up late payment chase emails, it’s just a matter of setting up the email templates, and letting FreeAgent get on with it.

Within the Freeagent system, under the main settings menu (at the top of the screen), there is an option of Invoices and Estimates, and under this, an option for Invoice Emails.   This option allows the definition of all kinds of email templates – initial invoice cover email, thank you (for payment) email, and of course late payment chasing emails.

When I initially started using FreeAgent, I just set up a single email reminder template which sent a chase email 3 days after the invoice was due, and then sent the same email every 3 days until payment was made.   This worked for a while, but if you got the same email over and over, would it persuade you to make payment?  So I made it more sophisticated and gained better results.

Using the template emails defined in my late payers rules, I set up 9 different late payment rules – 2 emails for each stage (in case the first one was missed).  For each stage of the chase process, I created a new chase email, and set the Reminder Rules for the days after payment is due to send the email.    I have found that sending an email every 3 or 4 days seems to work best.

For each stage, the subject of the email changes to reflect what is about to happen – a warning, about to raise charges, on stop, debt recovery etc.  The text of the email also changes as per my late payers email templates already discussed.

Note quite automatic
Now whilst this does all the late payment chasing for me, its note quite fully automatic.   I do have to raise late payment invoices (with charges and interest) now and again – and even if FreeAgent was able to do this, I would still prefer to do this by hand (using the FreeAgent invoice creation screen) just to remain in control.

To allow me to keep track of what I need to do next (raise a late payment charge, put them on stop or pass them to a debt recovery company), the 2nd email of each stage in the sequence is marked to be copied back to me.   That way, when the email arrives in my in tray, it acts as a trigger and reminder for my next action.

My sequence and dates of my chase emails in FreeAgent are then as follows:

I love the movies and various TV series which make up StarTrek.   When I think about what the distant future will bring and imagine all of the gadgets – all the technology is StarTrek related.  Transporters, Holodecks, Warp Drives and of course my favourite – replicators.  The ability to create things (whatever you want) out of thin air fascinates me.  Of course, I don’t expect to see any of this in my life time.  And according to the book ‘The physics of star trek’, much of this technology would be almost impossible anyway.

But whilst such technology may be a dream, one item from the StarTrek technology catalogue is available to you right now.  And it can be delivered to your home tomorrow (sort of).   I am talking about the replicators, or the ability to make anything almost out of thin air.

3D Printing

Whilst true replicators are many years (centuries?) off, the ability to create things out of thin air is here in the form of 3D printers.   If you are one of the few that have not heard of 3D printers, these are desktop printers which print 3D objects (yes, real objects you can hold and use).  By printing layer upon layer of thin slices which are bonded together, any 3D object can be created out of most man-made materials including plastic, metal, glass and even chocolate.

There are more details about how 3D printing works here.

3D printing is how, NOW
3D printing technology may be new, buts its here right now, and very real.  You can purchase a small 3D printer for around £2,000 (or $3,500), or a larger model (which can print objects 1m square) for around £17,500.   As the technology involves, we can expect the price to drop, the quality to improve, the printable sizes to expand and the selection of materials which can be used to increase.

Currently, 3D printers can print objects with up to 10 colours (depending on material), but can only use one man made material per object.  Companies such as HP are working on printers than can print in natural materials (such as wood) and can combine materials.  The quality (density of slices) will also improve in time.

There are talk that in 5 years time, we will have 3D printers which can print circuit boards and motors and furniture.   There is even talk that within the next 10 years, we could ship one single 3D printer to a remote area of the world, and they could then start printing their own 3D printers to make the products they need.

3D printing, how it will affect other companies

This technology for me is the most exciting innovation since, well since I have been alive.  Image it, you have a 3D printer and you need something – no more going to the shops to purchase a new pen, or a mouse, or keyboard or a chair – you simply download the plans from the internet and you can print your own.  Of course, it doesn’t stop there – why have a keyboard that works like everybody else’s?  Why not tweak the design to suite the size and shape of your hands – change the size of the keyboard, the height of the keys, the key order, its shape  - even print it as a ball.

But wait a minute; this is all great for us consumers – but what about manufacturing?  I still image that big and really complex things (cars, washing machines, planes, tables, etc) will be manufactured – but smaller items wont.  And there will be no need for spare parts.  If the hinge on your fridge door breaks, just print off a new one.  Bored with the design of your mobile phone case, design and print a new one.   What about a new mobile phone whilst you are at it?   So manufacturers will go bust – there will be no demand.

And this means that the shops, wholesalers, distributers, retailers, and other service companies will also go – why would we need any of these for items (clothes? Art? Tools?) that we can print ourselves?

How 3D printing will affect your business?
This leads me on to how 3D printing will affect our own businesses.   And make no mistake, it will impact you.

You may not make plastic widgets, or sell brass bolts, but if you are a service company, you are part of a food chain which starts with manufacturing.  When manufacturing ends and the shops disappear, their supply companies will go as well.  Without these companies, where would the demand for design, or web sites, or software, or marketing be?

The only companies which will benefit from 3D printing will be the designers (you will still need downloadable designs for the items you want to print), the printer manufacturers and the wholesalers of the raw printing material (the powered glass, plastic and metal).

Oh and of course hackers.  There will still be computer hackers.  But now, they would have turned their attention to overcoming the software blocks placed in the 3D printers to stop you duplicating the printers themselves (otherwise HP would be out of business in a day) or printing the latest designer handbag.

So if you haven’t started making plans of how you will deal with the major changes coming in the next 5 to 10 years, maybe now is the time to give it some thought.

Closing the store is the brave thing to do. …You are daring to imagine that you could have a different life. Oh, I know it doesn’t feel like that. You feel like a big fat failure. But you’re not. You’re marching into the unknown, armed with … nothing. Have a sandwich.

~ Birdie Conrad, from the film You’ve Got Mail, Warner Brothers , 1998

One of the things I find most annoying about the Internet is that it’s constantly changing.   Resources come, resources go, Google changes its rules, new social media appears, web services are created, and just as fast – things disappear.    I have lost count of the number of blogs, feeds, twitter uses I have subscribed to which have just…. faded away.

They don’t end, or stop, or conclude – they just…. fade.

In 2011 I made some big decisions.    I decided to end the development of two software products I had developed, I fired three customers (I tried to fire five but two gave me reason to reconsider) and I called it a day on two or three personal projects (which were not going anywhere).

As Birdie Conrad says (from the quote above), closure of anything can be a tough call, but sometimes it’s the brave (and right thing to do).

As freelancers and business owners, we are told we need to expand all of the time – more clients, better clients, more work, more projects.  Growth (we are told) is good.

But, sometimes all that is really needed is to call it time on the things that are holding us back – the bad customers, the waste of time projects, the pet activities which are distracting us.  When I have taken the difficult decision to make the brave move and cut these things off, I have always found that it creates a vacuum of time and effort which is quickly filled by new customers and new work.

So what are the things that are holding you back, that you need to cut off and close, in order to move forward?

It’s also useful to plan ahead, and know things that will also come to a conclusion at a future date.  This helps us know when we will have spare time and resource in the future which aids in planning.

As an example of this, this blog will end on the last day of December this year (2012) – that’s the date when I will make a final goodbye entry.   There is plenty of time between now and then, but I don’t want it to just fade… it will conclude.   Which will allow me more time to move forward on other things.   But plenty of advice from me between now and then.

And what about you.   Any brave moves you can make this year?

Whenever I come to the end of a freelance job or contract role, there are two things I do.   The first is to create a summary report of work performed and suggested next actions (which can really help to land more work with the same customer).  The second thing I do is to ask by email, three simple questions.

I prefer to ask the questions of the most senior person involved on the project by email.  Being able to answer by email means they have time to think about the answers , and also means you will get more honest answers than having to tell you to your face.

The answers to the first two questions help shape my working practices and style for future work.  The last one is there to scope out any more work with other companies.

The three questions I always ask (and the email I send out) are as follows:

Jo,

Having completed the {title here} project, there is one final task I would ask of you.   When you have a few moments spare, would it be possible for you to provide me some feedback by answering the following three questions – if there are more than one answer for any question, feel free to list them out.  I really appreciate any feedback you can provide.   The answer to question three is of course optional.

Many thanks in advance.

Regards

Me.

Q1: What did I do that particularly impressed you (so I can do them again for future clients)

A1:

Q2: What did I do that didn’t impress you (so I can avoid this in the future)

A2:

Q3: Do you know of anybody else who you think could also use my services?  If so, would you be happy to introduce us?

A3:

When you first send such an email, it will feel like the hardest thing you have ever done (the hardest part is actually pressing that SEND button), but I can promise that the majority of recipients will provide some form of answer that will provide you with valuable information.

So when you complete your next project or contract, take a deep breath, copy and paste, and now…. SEND.

Late payers can kill your company.   There is nothing worse than having completed work, and having to nag, chase and threaten a client in order for them to pay their bills.  Whilst they sit back withholding your money, your own bank balance reduces and panic can set in.

There is lots of advice available on the web about what to do about late payers for Freelancers, Contractors and Small Business.  I myself have talked before about various ways of dealing with late payers.   But a lot of this advice is not being honest about the real world, and how business really happens.   So let’s all put aside the make believe situations, and talk about what you can REALLY do about late payers.

Do you still want them as a customer?

Everything boils down to this question.   Once they pay that outstanding bill, do you still want them as a customer for future work?   If the answer is No, then all the options are open to you because the relationship is already damaged, so it’s hard to make it any worse.  Once you have decided the relationship is over – you are free to send nasty emails, make nasty calls, and even turn it over to legal professionals to send them threatening letters.

BUT, if you intend to keep them as a customer, and there is a real chance of more work, and you don’t want to ruin the relationship, then in a REAL world, your hands are somewhat tied.

This decision even extends to the pre-emptive measures that are advised.   Tighter payment terms, full payment up front, payment on delivery – all of these options sound great – right up to the moment you are in the sales negotiation.    When you are struggling to land a new customer and a prospect is willing to award you the work but only if you agree to their standard 100 day payment terms – are you really going to say no?  Really?

What you can Really Do

So that’s assume we work in a real world full of recession, tightening of belts and late paying customers.   What are some of the options that you can do if you don’t want to kill the relationship and the prospect of any future work?

Late Payment Fees – This is my method of dealing with late payers.   When somebody is late, I give them a sting through an invoice for an ‘administration’ fee.  I make a small bit of money out of it, and they get nudged into paying the original bill.  If push comes to shove, you can always cancel the late payment charge to keep the relationship sweet for future work.
Money Up Front – A lot of customers will reject this idea – but it comes down to negotiation.  Where a customer is always late, you could threaten to start raising Pro-forma invoices which would need to be settled before work is started.  Full payment up front is one extreme of the payment cycle, with late payment after the deliver as the other.  So you have a wide width for negotiation for future work with an agreed percentage (10%, 30%, 50% or 75%) up front and the rest after delivery.
Put them on STOP – If they want additional work, you can put them on stop – which means that you are not allowed to do any more work for them until they pay.   I have a mean person appointed in my company (a person picked at random) who I can blame for the decision.  Putting them on stop and not being allowed to provide support or that new development is never my decision – no, I was instructed to stop work by Jo Blogs (who is not available and won’t discuss the situation whilst money is outstanding) – sorry.
Extended Payment Terms – The bigger the customer, the more power they will use against you.  I have one multinational client which sent all suppliers (including myself) a letter 3 years ago which said they were rejecting all supplier terms and replacing them with their own 90 day terms.  I had the choice to take it or leave it.  Guess what…. They provided me a fair chunk of work – so I took it.   In my situation, there was no room for negotiation, but in a real world, payment terms could be reduced for late payers through negotiation.
Check your customer history – For new customers, don’t forget you can do credit checks.  At the very least, it is worth Googling “Their Co Name Late Payment” or “Their Co Name Accounts” or “Their Co Name supplier problems” to see if anybody else is talking about them being a problem payer.   If an existing customer suddenly starts making slow payments, it is worth doing this for your existing relationships to see if anything has changed.
Protecting Yourself with a contract – When push comes to shove, you can only threaten your customer with what is in your contract.  So make sure your payment terms, late fees, the right to alter the terms and ownership rights are clearly detailed.
Resign to chasing forever – But at the end of the day, if they are an existing customer and you want the future work, you may not have any other option than to resign yourself that they have the final decision on when they will pay you, and that you just have to keep chasing without turning nasty in order to keep the relationship sweet.

Every so often, I find myself having to retype text from a piece of paper.  It could be a letter sent to me, or something printed out at a customer site, or even personal information provided to me in paper form.

Retyping such information can be a pain – and I always find it annoying when the individual or company involved refuses to provide an electronic copy (or a PDF which has no selectable text, just an image of the text).

As an example, when I recently booked my 2012 holidays, the travel agent would only issue the itinerary in printed format.  This is no good to me when I want to copy the information into my TripIt travel planning software.   As I say, having to retype the information is just such a waste of time.

So I went looking for a service which would allow me to upload scanned images (scanned on my local multi-functional printer/scanner/fax) to the cloud, would then perform text extraction (OCR) and would finally provide me an electronic text version of the pages.   I tried 5 or 6 different systems, and have decided that for the rare occasions when I am not provided an electronic copy, OnLineOCR.net is the service I am going to use.

What I like about OnLineOCR.net
In my testing, I made my selection priorities (a) ease of use and (b) quality of OC recognition of the scanned text.   Whilst there was not much difference in any of the services I tested, I did find that OnlineOCR.net was just ahead of the others in terms of conversion hit rate.   Whilst none of the OCR services were 100% accurate in their recognition, OnLineOCR.net did seem to have the fewest mistakes – and any mistakes it did make were down to lines and marks on the original document (such as lines drawn across text).   I also found the turn around time of the OCR process from OnLineOCR.net to be as fast as, or indeed faster, than the other services I tested.

Different Methods of Working
What I most liked about the OnLineOCR.net service is the different ways that you can get documents into the OCR engine.   The basic method (which requires no registration) is a fairly uninteresting (outdated?) front end web application for browsing to a scanned image, uploading, and then a few seconds later a link is provided to download the text based version.  Using this non-registration version, you scan and process up to 15 pages an hour (I assume this is checked against your computers IP address).   Once you register (which is free), you then also have the ability to email them documents is a variety of formats (JPEG, TIFF, PDF, etc) and they will process and email you back a document of you preference (I use Word).   I found using my phone, I could even take photos and upload to the web to get the text back.

One note on this, the scan needs to be as clean as possible and scanned at a minimum of 300DPI to get the best results.

One word of warning – its not totally free
Now one word of note is that the system is not totally free.   Yes, you can avoid registration and still use it for the 15 page scan and OCR process per day – which is free and fine.   But when you register, you are given 20 credits – a credit equals 1 page of OCR, so you get 20 pages for free.   After this you have to pay or earn additional pages – but the cost is fairly cheap.   Having checked a number of other ‘free’ cloud based OCR services, all the applications I could find had such ‘free’ limitations.’

Summary
If we are honest, in an ideal word this service should not be needed.   Everything should come electronically and you should be able to cut and paste as with any electronic document.  BUT, we don’t live in such a word, and there will be times when you want to quickly scan in a document and use the text in the document without having to retype it all.   This service fits that bill.

For that reason, its worth signing up, adding the OCR email address to your contacts book, and have it ready and waiting for the odd times when you do need a page to be OCR’d.

One Final Word of caution, remember that this is a cloud based system.  Therefore whilst I would be happy to upload letters, sales copy and reference text, I would still not suggest scanning in and emailing bank statements and the like to OnLineOCR.net– just in case.

For my small company 2009 was a pretty good year – with the recession just starting and people cutting back, I still managed to increase both my company revenue and profit.  2010 was even better than 2009.  But by far, 2011 was the best year my company ever had.   I doubled the revenue in 2011, and tripled my profit level.  After analysis, I calculated that in 2011, my profit margin was 76.5% of turnover – which is a very good number indeed.

This good year has left me with a couple of problems; (1) A very large corporation tax bill due in the Autumn (so large in fact, I almost cry) and (2) a problem of how to invest the extra surplus money my company now finds itself with (a topic I will cover in a later post).   But in terms of all possible problems, these are two of the nicest problems to be facing.  I would rather have too much money than not enough.

So how did I do it?   How did I have a better year, each year, and expand my turnover massively in 2011?   Well it all comes down to the following 14 simple steps which I have built up over many years freelancing, continue to review and add to from time to time (details of each action in the links below):

1. Adwords as marketing – The vast majority of my marketing was carried out using Adwords.   In 2011, I spent £780 in adwords, and the projects generated from the adwords generated me £179,000 of revenue (I had additional revenue from projects from elsewhere, plus support and change revenue).   Now that is a good return by anybodies standards.
2. Respond to enquires FAST – I have seen various reports that suggest more than 50% of work is awarded to the company that responds first.   I made sure when I received an enquiry, I responded within the hour – faster if possible.
3. The never ending question sheet – As I have described previously, I have a ‘never ending question sheet’ which I build up over time to tease and pull out the exact project requirements.  This has helped me with a lot of work over the years as I seem more knowledgeable than my competitors.
4. Repeat the Requirements back to the prospect – In a recent post, I talked about the power (and additional revenue) of creating a Summary Of Understanding.   In 2011, my analysis shows that I generated an additional £19,000 of ADDITIONAL revenue through this technique, above and beyond the additional project scope.
5. Creation of very good proposals that deal with their needs and desires – I would like to think that I now have an almost perfect quotation template for projects that I have developed over time.   Plus, I have recently started utilising tools to create proposals and estimates much faster
6. Reward yourself – I treat myself with a little reward at various milestones, with biggish rewards when I win a contract (I even do a little dance) and also at the end of the project.  But I also reward myself at other times when I do a good job to keep my motivation going forwards.
7. Cloud Based project management – Once the project has been awarded, I used cloud based project management to control projects, which means I have less administration to do, and can run multiple projects at the same time whilst saying in control
8. Keeping control of my company finances – Other than adopting cloud based project management, switching from a standard accountant to on-line accounting has really changed my business.  I know my finance picture immediately with every invoice raised, bill paid or payroll payment.  Its so easy to do, I regularly mentally kick myself for paying my old accountant so much for so long when a child could do it.
9. Watching the cash flow – Coupled with the company finances using a cloud based system, tracking cash flow is a must.   I selected Float for cash flow and budgeting, and this has allowed me to see what my finances will look like next week, next month or next year and so make sure I am on track with my budgets.  This in turn means I no longer have to think about money, and can simply get on with generating it.
10. Increased productivity on the next project – I now cannot imagine a world without my two favourite free productivity tools; Dropbox and Evernote.   Dropbox makes the transfer of files between computers seamless, and Evernote means I am so much more efficient.   I use Evernote to piece together work I have done in the past for new customers, save any new routines which may be useful and so become a Professor Frankenstein of development with terrific results for all concerned.
11. Review and learn the lessons – At the end of the project, I do a review.  I review my project costs against my estimates (how profitable was the project, should I quote more next time), I review any problems to review this action plan, review my tools and review my documents to see if there were any holes which need to be plugged.
12. Offer follow up and bolt on services – After this internal review, I then create a project completion document for the customer, with suggestions for next steps, considerations and suggestions.   This generally leads onto more work and sometimes nice lucrative support contracts.
13. Upgrade LinkedIn – I also make a point of updating my LinkedIn profile with any new experience.  Whilst LinkedIn rarely produces any work directly, I have lost count of the number of times that somebody has told me that they Goggled me before awarding the work, only to find my LinkedIn profile near the top, and then viewed all my experience which gave them more faith in my company’s ability.
14. Repeat – And finally, repeat the cycle.  Of course, my marketing is always running (unless I am really overworked), so the repeat may loop back to step 4, 5 or 7.